8. Market Failures. Flashcards

1
Q

Marginal Private Cost.

A

The cost to an individual or firm of an economic transaction.

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2
Q

Marginal external cost.

A

The spillover costs to third parties of an economic transaction.

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3
Q

Marginal social cost.

A

The full cost to society of an economic transaction, including the private and external costs.

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4
Q

Marginal private benefit.

A

The benefit to an individual or firm of an economic transaction.

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5
Q

Marginal external benefit.

A

The spillover benefit to third parties of an economic transaction.

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6
Q

Marginal social benefit.

A

The full benefit to society of an economic transaction, including private and external benefits.

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7
Q

Positive externality.

A

A positive spillover effect to third parties of a market transaction.

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8
Q

Ex ante.

A

A term that refers to future events.

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9
Q

Ex post.

A

A term that refers to after the event.

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10
Q

Merit good.

A

A good that would be under consumed in a free market, as individuals do not fully perceive the benefits obtained from consumption.

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11
Q

Information failure.

A

Where economic agents do not properly perceive the benefits of costs of a transaction.

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12
Q

Partial market failure.

A

Where the free market provides a product but will a misallocation of resources.

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13
Q

Demerit good.

A

A good that would be over consumed in a free market, as it brings less overall benefit to consumers as they realise.

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14
Q

Public good.

A

A good which is both non-excludable and non-rivalry in consumption.

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15
Q

Free rider problem.

A

Where some consumers benefit from other consumers purchasing the goods. (Street lighting)

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16
Q

Externalities

A

Costs or benefits that spill over to third parties external to the market transaction.

17
Q

Quasi-public good.

A

A good that has some of the quantities of a public good but does not fully posses the two required characteristics of non rivalry and non excludability.

18
Q

Private good

A

A good that is both excludable and rival in consumption.

19
Q

Complete market failure.

A

Where the free market fails to provide a product at all.

20
Q

Occupational immobility

A

As patterns of demand and employment change, many workers may find it difficult to easily secure new jobs, since they lack the necessary skills.

21
Q

Geographical immobility.

A

Where workers find it difficult to move where employment opportunities may be, due to family and house prices.

22
Q

Income.

A

A flow of earnings to a factor of production over time.

23
Q

Wealth.

A

A stock of owned assets.